One of the most important lessons from the previous crisis is that you should not cut back like crazy, but rather stimulate the economy when things go wrong. This government has done this with the aid packages and the parties want to continue to do so, according to the calculations of the programs by the Central Planning Bureau (CPB). As a result, the bill is being passed on to the next generation, but is that a bad thing?
The CPB is at the Monday presentation of the calculations clear: most parties are shifting financial burdens to future generations.
The corona bill will largely be postponed to 2060. Not all parties have the same financial claim to the future. In the plans of the VVD, ChristenUnie and SGP, little will change compared to the current situation, but even then the bill will go to the future.
The shift is again the strongest at D66 and the SP. Causes include higher healthcare costs, lower retirement age (SP) and higher expenditure on free childcare (D66). Some costs are temporary, others recur every year.
Gambling on economic growth is a risk
The calculations do not concern the current aid packages for which the government has allocated around 60 billion euros, these costs were incurred last and this year. The planning office is looking at the years 2022 to 2025.
In any case, there is a gamble on economic growth. Isn’t that an extra risk? “In a way that is correct,” said CPB director Pieter Hasekamp in an explanation of the calculations. The fact that the economy is boosted in the short term does not mean that you can always reap the benefits in the longer term, he explains.
“Public jobs (as in the plans of PvdA and D66, ed.) Do not necessarily lead to higher employment in the long term.”
Cabinet has learned from previous crisis
Because parties will spend more money in the coming years than they will receive, government debt will rise in almost every program. But focusing on government debt or rising spending for the coming years is too shortsighted.
Extra expenditure also drives economic growth. This growth varies from 1.5 (ChristenUnie and SGP) to almost 2 (VVD, D66 and PvdA) percent per year. The costly plans also increase employment for all parties.
If you want to repair the financial damage as quickly as possible by making substantial cutbacks, there is a risk that economic growth will be squeezed even before the road upward has started. That is one of the lessons the cabinet has learned from the previous financial crisis ten years ago. “You almost have to overreact,” said outgoing minister Wouter Koolmees (Social Affairs) in the spring.
Government debt remains within safe margins
Moreover, the government debt will remain within the safe margins in the calculations at least until 2025. A government debt of 80 to 100 percent of the size of the economy is considered safe. “Only then does it get really annoying,” said Hasekamp.
There is a sensitive point here, because this safe margin is closely related to the interest that the Dutch government has to pay on the debt. That interest has been very low for a long time and sometimes negative, so that the Netherlands even receives extra money on loans.
“If interest rates rise – and that is not included in our sums – then the national debt will rise more sharply,” says Hasekamp. The interest rate development is erratic, the government has no influence on this. When the debt becomes unsustainable, according to the CPB director, it is therefore not easy to indicate.
Clean air and education cannot be seen in the yields
Perhaps the most important disclaimer with these economic figures is the costs that cannot be expressed in economic growth. Parties that invest a lot in clean air, innovation or education only see this reflected in expenditure in the CPB models, while it can lead to higher growth and more prosperity.
At the moment there are simply no ways to calculate these effects, said Hans Mommaas, director of the Netherlands Environmental Assessment Agency (PBL). “You not only want to map the costs of climate improvement, but also the benefits, such as cleaner air.”
Whether it is bad that the bill is being rolled over depends on what was bought with it. If it leads to higher growth, more jobs and the national debt remains within the safe margin, the next generation will mainly benefit from this. Rising interest rates or a new economic crisis can only throw a spanner in the works.
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